Any sound card would probably work fine, possibly a USB sound dongle would be an easy solution to try as well (and not require any slots on the PC). I would also suggest Vista for the OS, as it's super-easy working with multiple sound-cards with the mixer supplied with Vista (I use a virtual sound card to play Pandora on my Sage server, routing all it's sound to the virtual plug while keeping the other sounds localized to my onboard card, works very well on my system).
One issue I could possibly see is running full-screen games. On my dual-monitor setup on my main PC, some games and full-screen exclusive programs tend to make the secondary monitor do strange things, especially when they change resolution. Most games I play I put into windowed mode to get around that (not sure if Guildwars will let you do that or not, need to break out my old acct and test it out sometime). If the game supports Windowed borderless mode, you'll be in good shape there (unless Wincab in full-screen mode has issues).
The other issue may be the touch-screen pulling the mouse off his screen, and the fact that if he moves the mouse pointer off the side of the screen that the touchscreen is set to, it'll go off his screen completely. Also you using the touch-screen when he's doing something will switch the application focus to the juke app from what he's doing, would definitely cause issues with gaming...
Another option I mentioned on another thread was to go with something like an Intel Atom board, it's very small, and has plenty of horsepower for a jukebox (probably really overkill, but it will future-proof it at least for a while). It's a small board, drop that, 2gb ram, and a 30g SSD drive on it, and a touch-screen and you'd have about what you'd spend for a really good video card (which you'd probably need for gaming with dual-screens anyway), and not have the issues with window focus, or dual-monitors.